CMS Releases Medicare Shared Savings Program 2016 Results

Travis Broome

CMS just released 2016 data on the Medicare Shared Savings Program and the information proves that patience pays off, savings don't have to happen at the expense of quality, and that physician-led accountable care organizations are more successful.

This post was co-written by Farzad Mostashari, MD, founder of Aledade (headshot)

Before we dive into the results, it must be noted that CMS has once again provided transparency into the MSSP unmatched by any other value-driven program. This transparency simplifies the administrative burden of participating in the program and allows the private sector to make informed choices on how and where to invest in accountable care. Another necessary caveat is that these reported results are for performance against a benchmark, which is most likely not the best estimate of the true effect of accountable care organizations (ACOs) on costs within local markets, and underestimates the impact nationally.

With those notes out of the way, we can explore the 2016 results in the context of the current MSSP rules.

It gets better
The most important finding in the results is a familiar one: population health driven savings take time. Only a few interventions generate savings right away. Today is October 31, if a diabetic patient starts a weight loss program today with his or her doctor and care manager, it is highly unlikely that will generate savings in 2017.

The 100 “Freshman” ACOs that started in 2016 in aggregate had spending only $5 million below their benchmark and only 18% earned savings; the 85 Sophomores saved $50 million; the 100 Juniors saved $93 million; the 74 Seniors that started in 2013 saved Medicare $204 million. The 73 most experienced ACOs’ savings are now up to nearly $300 million a year. Among the Seniors and Graduates (which include many in 2-sided risk models), Medicare costs were $503 million lower than the benchmark and the ACOs received $357 million in shared savings payments, meaning CMS comes out $145 million ahead (not including an additional $6 million in payments to CMS for losses from 2-sided ACOs).

In addition to the realities of the timelines for savings from prevention, care management, and other interventions, ACOs that succeed in implementation are the ones that last in the program. Of the 106 ACOs that started in the MSSP in 2013, now only 74 remain. This is an expected outcome and a good one. Moving from fee-for-service (FFS) to value also involves moving into a more competitive environment. ACO work is hard. It competes with other priorities. Not every ACO is going to succeed in implementing interventions that will make a difference over the long run. A certain amount of creative destruction is necessary in this new, competitive value-driven healthcare world.

Those early ACOs that are making progress on cost and utilization should keep the faith. ACOs that are not making progress should make way for new entrants and fresh ideas. From a CMS perspective, having a few years of 1-sided risk provides a necessary “safe zone” needed to encourage participation in alternative payment models, but as ACOs mature, they should be expected to move to 2-sided risk or exit the program.

For the movement from volume to value, patience is required.

Savings do not come at the expense of quality
Besides the benefits of playing the long game, what else does the data tell us? ACOs do very well on quality.

CMS has stated in the past that for measures that exist in both ACOs and FFS, ACOs consistently perform better. In every start year of the ACO program, those ACOs receiving savings did better on quality than those that did not. There is a lot more to being a successful ACO than just doing well on quality scores, but this data should provide reassurance to policy makers and the public that it is possible to achieve both better care and lower cost.

CMS launched a new initiative called Meaningful Measures to work on developing and refining measurement. Over time, we would expect meaningful measures aligned with outcomes to correlate more strongly with the achievement of savings.